Within a nation exceeding 8.5 million people, Israel is a world leader in technology and innovation, consistently producing an impressive number of tech startups. From drone technology and ride sharing applications, to unique online shopping platforms and breakthrough technologies in the field of life science, Israel’s tech companies cover a myriad of fields. It therefore comes as no surprise that Chinese investors are eager to delve into the countless possibilities, which stem from the advancement of Israeli tech companies.
In 2015, Chinese investments in Israeli startups exceeded $500 million, unveiling a growth of more than 300 percent from 2012. Throughout 2016, significant conferences were held in order to introduce prospective Chinese investors to Israeli tech companies. In January 2016, a China-Israel Innovation Summit was held in Beijing, where hundreds of Chinese Investors attended, in order to meet various Israeli tech companies, with the potential for large investments. The Summit acts as a mediator between Chinese investors and Israeli tech companies.
In light of the success of the January conference, a subsequent conference was held in September 2016 in Tel Aviv, where over 300 Israeli high-tech companies presented their ideas to 2,300 Chinese investors. In addition, in September 2016, a conference was held in Shanghai, where 100 Israeli high-tech and startup companies participated, joined by 1000 Chinese investors. Among the various investor companies, Alibaba, Baidu, Lenovo, SAIF Partners, GF Xinde and many more, joined the event. One of the conference’s partners was the ‘China-Israel Changzhou Innovation Park’, a bi-national government initiative, which has become a tech-hub for large Israeli tech companies to use as a means for penetrating the Chinese market.
In recent years, Chinese investors have shown specific interest in the fields of life science, pharma, medical devices, agrotech, Fintech and e-commerce.
Prominent examples of Chinese investments in these fields include, inter alia, the sale of cCam Biotherapeutics for approx. USD605 million and the acquisition by ChemChina of Adama Agriculture Solutions (and its subsequent sale to a fully owned subsidiary, Hubei Sanonda Co. Ltd.).
In addition to the various Chinese investments in Israeli companies, China has reaped the benefits of Israeli companies operating in China. For example, Israeli-Chinese private equity firm Infinity Group and Neusoft Corporation have approved the establishment of a $250 million investment to back Israeli life science companies operating in China. Neusoft Corporation is China’s largest IT Corporation, holding a 50% share of the medical market in China. This fund will assist Israeli medical companies to connect with the Chinese market through the integration of cloud-based platforms, which assists Israeli life science companies with regulatory approvals and product promotion in China.
Furthermore, Israeli entrepreneurs are highly sought after in China, predominantly in the fields of mobile and web technologies, gaming, cleantech, agrotech and digital health, which all go hand in hand with Israeli high-tech expertise.
As with any investment in a different country, Chinese investors have had to deal with the prevalent challenges of investing in Israel’s tech companies. Aside from the language barrier, the differences between the Israeli and Chinese cultures have been a challenging stepping stone for Chinese Investors. For example, within Israeli culture, companies prefer transactions to be quick and efficient, while Chinese companies are patient with a more tolerant approach. In addition, there are numerous rules and regulations to be followed in China, while Israeli companies strive for instantaneous completion of contracts and agreements. This bridge is a test to the relationship between Chinese investors and Israeli tech companies.
Regardless of the challenges facing Chinese investors in Israeli tech companies, these increasing investments and acquisitions allow for limitless possibilities in relation to research, development, marketing and expansion of the Israeli tech world. The evolving relationship between China and Israel demonstrates a promising future for Israeli companies and startups.